An inner Brisbane unit glut has seen prices slump to their lowest in three years with a recovery not expected for at least 12 months, experts say.
Domain’s State of the Market Report released today showed the median unit price in Brisbane was $376,685 — down more than 3 per cent over the September quarter and more than 6 per cent year on year.
Domain’s chief economist Andrew Wilson said the supply of apartments in suburbs such as Brisbane’s West End had well and truly outstripped demand — and there was more to come.
“Even some of the outer suburbs such as Chermside have had significant levels of development recently and as a consequence supply has moved ahead of demand,” he said.
“The peak of the unit completions is still to come.
“But if we look at the approvals that has declined sharply so when the existing stock is soaked up there certainly will not be a lot of replacement stock coming through.”
Unit rent prices remained steady over the quarter at $370 a week but had dropped slightly compared to the same time last year.
Dr Wilson said the figures were more bad news for Brisbane unit owners but the oversupply had not been all bad for the economy.
“The building boom for apartments has come along and provided well-needed jobs and economic energy so it’s not all a negative story,” he said.
“Following the decline in the mining boom Queensland has been looking for other areas to generate growth.”
West End property owner Adam Carter bought a unit off the plan in 2013 and despite the negative outlook for owners, said the influx of shops and facilities for newcomers had maintained his property value.
“When there’s good stock built, people have a choice,” he said.
“Instead of renting a 15-year-old apartment in a complex with no facilities, people are willing to pay a little bit more to get a brand-new unit in a good area with facilities and parking.”
He said it appeared the unit glut was not as obvious in West End.
“Probably the biggest indicator that they’re filled is if you look at the street parking, it’s all disappeared,” Mr Carter.
“There’s always removalist trucks there on the weekend, there’s always people on the street.
“I don’t see it as an oversupply.”
Domain’s Andrew Wilson said it would likely be 12 months until the glut of empty units started to fill and prices increased again.
“The question is when will the bottom of the market be found?” he said.
“I think we’re looking over the medium term which is over a year until we see a consistent increase in prices growth.”
In regional Queensland, Domain data showed the largest median house price drop was in Mackay, where prices slumped 9.5 per cent over the quarter.
The biggest jump was in Gympie, where median house prices increased by 5 per cent to $314,000 due to a “solid” economic outlook, the data showed.